Chicken plans set to ruffle feathers

Tag : Frozen Poultry

With food inflation in Namibia running at anywhere between 15 and25 per cent, the desirability of statutory protection in the formof additional taxes on basic foodstuffs is now being questioned bywholesalers and consumers alike.
If done under IIP measures, Supreme Poultry's plans to erect achicken broiler farm 15 km outside Karibib on NamWater's Spes Bonafarm by March next year would mean all other chicken imported fromoutside Namibia would face a 40 per cent levy.
The IIP measures, announced by the Ministry of Agriculture, Waterand Rural Development in 2001, levies an import tariff of 40 - 46per cent on all Ultra High Temperature (UHT) milk, broiler chickensand pasta imported from outside Namibia.
"Infant industry status implies that Namibia can levy importsof pasta, broilers and UHT milk from outside Namibia (includingSouthern African Customs Union members) for an eight yearperiod" under Section 54 of the Namibian Customs and ExciseAct to protect local investment, the MAWRD said in an advertpublished at the time.
This means Namib Mills (already benefiting from similar measures onimported maize) enjoys a distinct marketing advantage on theirPolana Pasta product.
UHT (Ultra High Temperature) milk produced by O&L's NamDairiesrecently had this IIP levy on competing imports extended foranother four years.
A similar tariff was proposed for broiler chickens, but has not yetbeen implemented.
While the Ministry of Finance said this IIP measure for broilerchickens had expired, Trade and Industry officials appear to be ofthe opposite view.
Supreme Chicken's local director Raymond Liang said MTI officialshad told his company that the IIP levy was still in place andinsisted that their locally-produced chicken - once their plant wasup and running - would not cost significantly more than frozenchicken imported from South Africa and Brazil.
Frozen chickens imported from South Africa are priced according tothe Western Cape benchmark wholesale price of about N$15 per kilo,and retail in supermarkets there for about the same.
But should the IPP tariff of 46 per cent be imposed, chickenimported from South Africa could cost as much N$28 to N$32 a kiloon the retail market, local wholesalers fear.
If maintained over four years, Supreme could have an accumulatedprice advantage of up to N$208 million for the next four years overits competition under IIP tariffs, it was calculated.
Chicken is widely believed to be the most affordable form of animalprotein: South Africans have increased their consumption from 2,3kilo to 22,4 kilo per annum over the past 10 years, statisticsshowed.
Supreme's Liang however said their biggest concern was"dumping" of chicken by their two larger South Africancompetitors, which - combined with the high cost of chicken feedlocally - had seen several previous such ventures fail within a fewmonths.
"The cost effectiveness of producing in Namibia is quite good,but our main concern is dumping of chicken at prices belowoperational cost by the others big guys in South Africa," hesaid.
While Supreme's planned Karibib broiler plant would need aboutthree to four years to get to its optimum capacity of 350 tons perweek (Namibia consumed about 305 tons per week at present, hesaid), supplementary chicken would be sourced from their Botswanaand South African operations in the meanwhile.
These imports, Liang said, would "probably" be subject tothe IIP levy.
With initial production aiming for about 100 tons a week, thisleaves 205 tons that would attract the punitive 40 per cent IIPlevy.
While the responsible officials at MTI did not respond to queries,another official pointed out that such IIP tariffs would applyacross the board - meaning that any chicken not produced at theproposed Karibib plant would cost at least 40 per cent more.
The proposed Karibib plant has also come under fire for its"astronomical" water usage: with between 18 and 22 litresneeded per slaughtered bird and 50 000 birds to be slaughtered perweek, annual water usage would run to millions of litres per year.
Liang however indicated that they would welcome alternative sitesfor their plant, and would be using a process that uses recycledwater.
Supreme's plans were by no means the only such scheme attractingfire at present: Namdairies' protection of their UHT milk wasrecently extended for another eight years, leading to a legalchallenge by a rival importer, wholesaler Tauber & Corssen.